Currency

Markets on fragile footing as week gets under way

 

After markets tried to put on a show of stability late Friday, confidence has crumpled to start the week as the narrative points to a second guessing the V-shaped recovery in asset markets and concerns that Covid19 remains hard to tame. Jumpy price action since Friday make this a tactically difficult market to assess and trade.

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Licking Yesterday’s Wounds Today

 

The nearly three-month rally in risk assets ended with high drama with a stomach-churning almost 6% slide in the S&P 500 yesterday. Follow-through selling was seen in the Asia-Pacific region, but most markets recovered from their lows, and although losses were still recorded, the downside momentum seemed broken. The same holds true for Europe. Bourses opened lower but by mid-morning had moved higher (~1.4%), and US shares are trading firmer (~2%). The MSCI Asia Pacific Index snapped a two-week advance that saw it rise 9.5% and is off around 3% this week. The Dow Jones Stoxx 600 rose around 13.75% over the past two weeks, and even with today’s gains that snap a four-day slide, it is off about 5.3% this week.

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All of the World’s Money and Markets in One Visualization

In the current economic circumstances, there are some pretty large numbers being thrown around by both governments and the financial media.

The U.S. budget deficit this year, for example, is projected to hit $3.8 trillion, which would be more than double the previous record set during the financial crisis ($1.41 trillion in FY2009). Meanwhile, the Fed has announced “open-ended” asset-buying programs to support the economy, which will add even more to its current $7 trillion balance sheet.

Given the scale of these new numbers—how can we relate them back to the more conventional numbers and figures that we may be more familiar with? CLICK for complete article

The Fed Is Printing Money At Unprecedented Levels

“I think there is a strong likelihood we will need another bill.”

That’s according to Treasury Secretary Steven Mnuchin, who supports additional fiscal stimulus to combat the economic impact of the novel coronavirus—within reason.

The secretary’s statement comes after the House passed a record-shattering $3 trillion relief package, though leaders in the Senate have said they will not put it up for a vote. Senate Majority Leader Mitch McConnell has made it clear that the next coronavirus bill “cannot exceed $1 trillion,” according to reporting by Axios.

Even so, the U.S. government’s response is already massive, dwarfing anything that’s come before it.

Across the pond, Britain’s government is likewise spending like crazy. The U.K. budget deficit widened to a record 62.1 billion pounds ($76 billion) in the month of April, equal to the government’s total borrowing in 2019, according to Bloomberg. CLICK for complete article

Bitcoin Retakes $9K — 3 Technical Reasons There’s Still Room to Run

The price of Bitcoin surges above $9,000 ahead of a Goldman Sachs client call about gold and BTC.

The price of Bitcoin (BTC) surged above $9,000, demonstrating a decent recovery in the last 24 hours. Market data shows a further upsurge to the $9,300 to $9,400 range is likely in the near-term.

Three key reasons increase the probability of a minor rally: liquidation of 25x to 50x shorts are at $9,300, whales using the Goldman Sachs narrative and low funding rates in the futures market…CLICK for complete article

Coronavirus Has Put Bitcoin’s Safe Haven Narrative to the Test

The price of Bitcoin (BTC) suffered a tremendous crash on March 12, falling from almost $8,000 to stabilize at around $5,000, a loss of about 40% in the span of less than two days. This happened in the context of a global sell-off in all equity markets, where United States stock market indices such as the Dow Jones Industrial Average and the S&P 500 lost around 10% in a single day — a substantial loss for traditional markets.

Some were quick to decree the end of the narrative that Bitcoin is a safe haven asset, sometimes called a store of value, while others pointed to the fact that even gold fell during the bloodbath….CLICK for complete article